Green supply chains and Performance Key Indicators

Assignment OverviewFor this assignment, you will recommend green design changes to a global supply chain by considering key performance indicators (KPIs).the attached two articles will he helpful… Please read them and use them in your paperAssignment DirectionsTo complete this assignment:Identify a global supply chain for a well-known consumer product (Use Walmart because it will allow you to identify governmental, legal, and environmental issues related to the pursuit of KPIs, and cultural sensitivities associated with the supply chain)Then write and submit a 5 page (Cover page and reference pages not included) paper in which you:
Describe the global supply chain and identify KPIs managers could use to drive green design changes.Evaluate governmental, legal, and environmental issues related to the pursuit of the improved environmental performance. Evaluate the supply chain’s cultural sensitivity and any potential or actual consequence that can result from misinterpreting local business norms.Recommend green design changes to the supply chain based on the KPIs.Develop at least two ethical standards of conduct statements for the chain that enforce sensitivity to local cultures.As you complete your assignment, be sure your paper meets the following guidelines:Written communication: Written communication is free of errors that detract from the overall message.APA formatting: All resources and citations should be formatted according to current APA style and formatting guidelines.Length: 5 typed, double-spaced pages (Cover page and reference pages not included)Font and font size: Times New Roman, 12 pointThe paper must have an introduction, body, and Conclusion
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FEATURE ARTICLE
123
Drivers of Green Supply
Chain in Emerging
Economies
By
Anis Ben Brik
Kamel Mellahi
Belaid Rettab
In spite of the burgeoning interest in green supply chain management in Western developed countries
and large emerging economies, little research exists on the topic in small emerging and developing
countries. In this study, we surveyed firms based in Dubai to identify the main drivers of green supply
chain management and their impact on supply chain greening. We discuss theoretical and managerial implications of the findings. © 2013 Wiley Periodicals, Inc.
Introduction
E
nvironmental problems are global in nature and
scale, and tackling them requires policymakers
and leaders of firms based in Western developed
economies as well as emerging and developing economies
to embrace environmentally friendly practices (Hart,
1997). In response to the serious and increasing environmental concerns, environmentally friendly policies have
emerged as an inescapable priority for policymakers in
most countries (Porter & Kramer, 2006). Similarly, environmentalists are putting increasing pressure on firms
to improve their environmental performance. One of
the areas that policymakers and environmentalists have
focused on is green supply chain (GSC) management.
By definition, supply chain management involves
the management of upstream (Min & Galle, 2001) and
downstream (Murphy & Poist, 2000) relationships with
suppliers and customers. Supply chain greening consists
of activities that include reduction and/or substitution of
inbound materials, recycling, reclamation, and remanufacturing, and reverse logistics of outbound materials
(Zhu & Sarkis, 2004), as well as the process through
which the goods move through the firm, including
inbound and outbound transport, storage, and processing of materials (Mellahi, Morrell, & Wood, 2009; Narasimhan & Carter, 1998). These activities aim at reducing
environmental risk by developing processes that facilitate
substituting harmful materials with more environmentally conscious ones, reduction or elimination of using
Correspondence to: Anis Ben Brik, United Arab Emirates University, College of Business & Economics, Al Ain – United Arab Emirates, P.O. Box 17555, (9713)
71333-266 (phone), (9713) 7624-384 (fax), anisdago@gmail.com.
Published online in Wiley Online Library (wileyonlinelibrary.com)
© 2013 Wiley Periodicals, Inc. • DOI: 10.1002/tie.21531
124 FEATURE ARTICLE
potentially environmentally damaging substances, and
regular environmental auditing.
There is an extensive body of research on the drivers for GSC. A chief limitation of this body of research is
its exclusive focus on firms based in Western developed
economies (Walton, Handfield, & Melnyk, 1998) and
large emerging countries such as China (Zhu, Sarkis,
& Geng, 2005; Zhu, Sarkis, & Lai, 2007; Zhu, Sarkis,
Cordeiro & Lai, 2008). Exceptions here include Rao’s
(2002) study of east Asian countries and Lee’s (2008)
study of Korean firms. As yet, research on firms based
in small emerging economies is still mostly uncharted
territory. In this article, our aim is to enhance the understanding of key enablers and drivers of GSC adoption in
emerging countries.
We chose Dubai as the location for our study because
it is one of the fastest-growing economies in the world
and one of the most attractive investment destinations
for multinational companies (MNCs) in the Middle East
region. Dubai has experienced record-breaking economic
growth and extraordinary transformation from a nomadic
economy to a modern service-based economy over the
past few decades. This makes Dubai an interesting case
for the study of GSC for a number of reasons. First, similar to other fast-developing regions within developing and
emerging countries, the quest for fast economic development takes precedence over environmental degradation
in Dubai. By placing priority on economic development,
environmentally unfriendly economic projects may be
pursued at the expense of the environment, and pressure
on firms to green their supply chain is low. Lo, Fryxell,
and Wong (2006, p. 389) note that “it is a daunting task
to improve environmental enforcement in such countries
where officials are pro-growth, the administrative capacity
of environmental agency is usually weak, and government
and societal support is only just emerging.” Given that
quite often environmentally friendly practices are attributed to the efficacy and effectiveness of the regulatory
framework (Rugman & Verbeke, 1998), this study will
shed a new light on the adoption of GSC management
in a context where formal regulations are weak or absent
and government officials may harbour biases towards
economic development at the expense of environment
management responsibility. Further, in contrast to Western developed countries where external forces such as
customer pressure, stakeholder pressure, and community
pressure play a significant role in pushing firms to adopt
environmentally friendly practices (Rugman & Verbeke,
1998), societal concerns over the negative environmental impacts of environmentally unfriendly practices is
low in Dubai. For instance, consumers with low levels of
Thunderbird International Business Review Vol. 55, No. 2 March/April 2013
education and information about environment degradation may give inappropriately low weight to environmentally unfriendly practices because of lack of awareness of
the consequences (Rettab, Brik, & Mellahi, 2009). Rettab
et al. (2009) found that low green consumerism in Dubai
resulted in lack of pressure on firms to develop green
strategies. This study will help us understand the drivers
for GSC in a context where external pressure on firms to
adopt a GSC management are weak or absent.
In addition to the foregoing, given the nascence
of environmental performance in emerging countries,
research that provides a better understanding of the relative importance of different drivers for the adoption of
GSC management is of significant importance for managers and policymakers. The current dearth of empirical knowledge on the drivers of supply chain greening
in emerging countries may result in management and
policymakers mistakenly addressing the wrong factors
and neglecting the factors that have the most impact.
For instance, experts know little about whether firms
that adopt a GSC management do so because of external
coercive pressure or as a result of internal factors such
as perceived economic benefit. To help close this gap in
knowledge, this exploratory study aims to answer a key
question: what are the most important determinants of
GSC management in a small emerging economy such as
Dubai?
The current dearth of empirical knowledge on the drivers of supply chain greening
in emerging countries may
result in management and
policymakers mistakenly
addressing the wrong factors
and neglecting the factors
that have the most impact.
DOI: 10.1002/tie
Drivers of Green Supply Chain in Emerging Economies
The remainder of the article is organized into
three sections. First, we will build on extant literature
to develop a theoretical framework of the key drivers
and barriers to GSC management in Dubai. Second, we
will describe the methodology of the study and research
design and analyze the findings of the study. Third, we
will discuss the major findings and their policy, managerial, and theoretical implications.
Theoretical Framework for the
Adoption of Green Supply Chain
Literature on the drivers and enablers for GSC adoption
can be broadly categorized into two main streams: external and internal drivers.
External Drivers
The external drivers’ literature has its theoretical roots
in institutional theory, which posits that firms adopt certain practices because of coercive institutional pressures
(Campbell, 2006, 2007; Hoffman & Ventresca, 2002;
Powell & DiMaggio, 1991; Zhu, Sarkis, Cordeiro & Lai,
2008). Institutional theorists argue that external pressures play a critical role in determining organizational
actions by pushing firm leaders to adopt certain practices
and to refrain from practicing others (Powell & DiMaggio, 1991). Institutional scholars posit that institutional
pressures are required because managers generally have a
poor understanding of their firm’s environmental impact
(Ashford, 1993) and suffer from strong inertia that prevents them from taking voluntary action to adopt a GSC
management (Cordano & Frieze, 2000).
External drivers are defined in this study as external
forces that may prompt a firm to consider and adopt
GSC management. Although many external factors
may drive a firm to adopt a GSC management, extant
research typically cites regulatory framework, pressure
from customers, and competitive dynamics as key drivers. Given the large number of MNCs operating in Dubai
and the export-oriented nature of the Dubai economy,
we included pressures from headquarters and export
destination country regulations as potential key external
drivers for supply chain greening. We discuss each of
these factors in turn.
Regulations
Regulations are the most frequently cited drivers for
supply chain greening (Beamon, 1999; Green, Morton,
& New, 1996; Hall, 2001; Min & Galle, 2001; Walton
et al., 1998). The need for an external pressure such as
a stringent regulatory framework to coerce organizations
DOI: 10.1002/tie
125
to adopt GSC management is based on the assumption
that, generally, firms’ leaders assume that compliance
with environmental regulations impose added costs on
the organization, which may erode or weaken their competitiveness (Christainsen and Haveman, 1981; Conrad &
Morrison, 1989; Darnall, 2006). Therefore, left to their
own devices, firm managers may refrain from allocating
rare resources to activities such as supply chain greening.
Furthermore, extant research provides evidence to suggest that in the early stage of adoption of a new management practice, regulations are necessary to prompt firm
managers to develop green practices to reduce their environmental impact (Henriques & Sadorsky, 1996; Porter
& Van der Linde, 1995). This body of research posits that
the compulsory nature of regulations to green the supply
chain drives firm leaders to take necessary measures to
comply with regulations. In a similar vein, Klassen and
Vachon (2003) argued that regulations are the primary
driver for supply chain greening because firms are generally mindful of regulations due to fear of legal sanctions
if they do not comply.
In addition to the foregoing, environmental regulations are also popular within policymaking circles. This
is reflected in the great proliferation of environmental
legislations (Rezaee, 2000). In almost all developed
nations, a plethora of legislation governs environmental
issues. This view is based on the previously mentioned
assumption that, given the choice, firm managers
will not pursue practices that are perceived to have a
negative impact on the bottom line. Rettab et al. (2009)
argued for a stringent regulatory framework for firms,
in general, and firms based in emerging and developing economies, in particular. They observed that an
incentive always exists for firms to resort to free riding,
and to try and opt out from any limiting ground rules,
no matter how ethically desirable. A large body of literature, however, questions the assumption that firms
adopt environmentally friendly practices through legal
compulsion. Indeed, current green business literature
in emerging and developing countries suggests that
regulations have little effect on firms’ environmental
practices (Lo et al., 2006; Pargal & Wheeler, 1996).
Lo et al. (2006) cite inadequate enforcement capacity
as the key reason for lack of firms’ compliance with
environmental regulations in emerging and developing
countries. One could argue, however, that at the early
stage of adoption of supply chain greening, such as
the case of emerging and developing economies, firm
leaders may use compliance with regulations to obtain
legitimacy from political actors by signaling that they
are committed to the regulators’ agenda or to increase
Thunderbird International Business Review Vol. 55, No. 2 March/April 2013
126 FEATURE ARTICLE
interactions and collaboration with regulatory bodies, which may lead to increased trust between them
as well as additional benefits such as access to critical
institutional-based resources that make their ability to
do business easier (Darnall, 2006). This leads to the
first regulatory driven hypotheses:
H1a: Local government regulations are positively associated with
the adoption of GSC.
H1b: Export country regulations are positively associated with the
adoption of GSC.
Customers
Customers may coerce firms to implement a GSC management (Darnall, 2006; Vandermerwe & Oliff, 1990).
This is because the demand for green products has
increased significantly over the years (Oyewole, 2001).
While this is especially the case in western Europe (for
example, opinion surveys have indicated that 80% of
consumers in Germany, Italy, and Spain would switch to
greener products if given the opportunity), evidence suggests that this demand is also rapidly spreading worldwide
(Oyewole, 2001). Although little doubt remains that public opinion has become a powerful force in encouraging
firms to take environmental issues seriously, one must
note that, because of access to information and the high
cost of green products, market pressure on firms to adopt
a GSC management varies greatly between countries. For
instance, Zhu et al. (2005) noted that consumers’ pressure is modest in China. This is due in part to the fact that
supply chain greening generally results in higher costs
and more expensive products that Chinese consumers
might not be able to afford. Further, a lack of education
about green issues exists in emerging and developing
economies. Given the income disparity in Dubai—high
wages for professionals and very low wages for the majority carrying out manual works—one would expect the
professional class to be able to pay price premiums for
their products and services, and they may exert pressure
on firms to adopt a GSC management; however, for the
majority, “green issues” would not be at the top of their
concerns, and they are not able to pay premium prices
for green products. Furthermore, generally in emerging and developing economies, the public has far less
knowledge of the nature of the products firms produce,
the raw materials required, the processes employed, and
the wastes generated. Based on the foregoing, one would
expect the market for environmentally friendly products
to still be small in Dubai and therefore consumers would
not put strong pressure on firms to green their supply
chain.
Thunderbird International Business Review Vol. 55, No. 2 March/April 2013
Given the income disparity
in Dubai—high wages for
professionals and very low
wages for the majority carrying out manual works—
one would expect the
professional class to be able
to pay price premiums for
their products and services,
and they may exert pressure
on firms to adopt a GSC
management; however, for
the majority, “green issues”
would not be at the top of
their concerns, and they are
not able to pay premium
prices for green products.
Competition
In addition to regulations, firm leaders may adopt certain
practices because of mimetic isomorphism, which comes
from imitating other firms in the sector, such as their
competitors. Chan and Makino (2007) argued that firms
often conform to institutional pressure by mimicking the
prevalent organizational practices of their competitors to
gain legitimacy in their institutional environment. That
is, uniform institutional pressure will lead to uniform
intra-industry adoption of GSC as a “desirable, proper
or appropriate” practice (Suchman, 1995). Mimetic
DOI: 10.1002/tie
Drivers of Green Supply Chain in Emerging Economies
isomorphism is particularly important in emerging and
developing economies (Zaheer, 1995). However, we
suspect that given the low level adoption of GSC management in developing and emerging economies, mimetic
pressure would be very low.
Multinational Pressure
A large number of firms operating in Dubai are subsidiaries of MNCs. Therefore, one could argue that leaders
of MNCs may potentially drive supply chain greening
within their subsidiaries based in Dubai, because MNCs
are more visible as a result of a growing interest by a wide
range of stakeholders, including the media, nongovernmental organizations (NGOs), investors, and consumers,
in how MNC leaders manage the ethical implications of
increased global sourcing. Further, the high bargaining
power of MNCs vis-à-vis their suppliers created a respondeat superior type relationship between MNCs and their
suppliers. This led a number of stakeholders to argue
that MNCs have an inherent responsibility for the actions
of their suppliers (Rettab et al., 2009). Arnold and Bowie
(2007) argued that “MNCs’ managers have duties, both
in their own factories and in their contract factories …
because of the power they have over the owners and
managers of such factories, and because of the substantial
resources at their disposal.” Also, several rating agencies monitor ethical and environmental performance of
global supply chains. An example here is the General
Index developed by Insight Investment and Account Ability, which screens and scores the performance of major
FTSE listed companies on key supply chain factors. This
importance allocated to ethical issues in the supply chain
is underpinned by the assumption that the choices firms
make in the ways they organize and manage their supply
chain are shaped, to a large extent, by the beliefs managers of MNCs in the firms’ headquarters hold about the
importance of ethical practices inside and outside their
firms. Therefore, an MNC could be seen as ethical or
unethical based on the way it manages ethical practices
within and between its networks of subsidiaries and suppliers. Given the preceding analysis, one would expect
that MNCs would play a central role in their subsidiaries’
supply chain management and would perhaps mandate
rather than just encourage their subsidiaries to adopt a
GSC management. Accordingly, the following—market
driven—hypotheses are proposed:
127
H2c: Competition is not significantly associated with the adoption
of GSC.
Internal Drivers
Walker, Di Sisto, and McBain (2008) divided internal
drivers for supply chain greening into managerial factors related to top management team ethical values and
commitment, and organizational drivers concerned with
the economic benefits of greening the supply chain. We
discuss these two drivers.
Leadership
Firms are managed by individuals with different levels
of commitment to environmental issues and endowed
with different capabilities that ultimately determine the
extent to which a firm’s leaders adopt a GSC management
(Vachon & Klassen, 2006). A large body of literature shows
that a key to green supply chain management is commitment and support of the top management team and
a culture that fosters environmentally friendly practices
(Nakamura, Takahashi, & Vertinsky, 2001; Porter & van der
Linde, 1995; Weaver, Trevino, & Cochran, 1999; Zhu et al.,
2005). Managers may be committed to green the supply
chain because of the moral imperative to “do what is right”
with less regard for economic performance (Donaldson &
Davis, 1991). Zhu, Sarkis, & Geng (2005, p. 462) noted that
“without this initial upper management commitment, most
(green supply chain) programs are bound to fail, much
less be truly initiated.” Taking the above leadership—i.e.,
moral—arguments as a whole, we hypothesize that:
H3: Leadership has a positive influence on the adoption of GSC.
H2a: MNCs policies are positively associated with the adoption
of GSC.
Economic Incentives
Organizations may also be driven by the business case f …
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